| Nevada                              |   | 71-1029846               |
|-------------------------------------|--------|--------------------------|
| State      or other jurisdiction of |   | (I.R.S.      Employer    |
| incorporation      or organization  |   | Identification      No.) |

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|         |                                        |                                                                                                                   | PAGE            |
|--------------|---------------------------------------------|------------------------------------------------------------------------------------------------------------------------|-----------------|
|         |                                        |                                                                                                                   |            |
| PART      I  | FINANCIAL      INFORMATION                  |                                                                                                                   |
|         | ITEM      1.                                | FINANCIAL      STATEMENTS                                                                                              |            |
|         |                                        | Balance      Sheets                                                                                                    | F-1             |
|         |                                        | Statements      of Operations and Comprehensive Income                                                                 | F-2             |
|         |                                        | Statement      of Stockholders’ Deficit                                                                          | F-3             |
|         |                                        | Statements      of Cash Flows                                                                                          | F-4             |
|         |                                        | Notes      to the Financial Statements                                                                                 | F-5      to F-9 |
|         | ITEM      2.                                | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS                        | 16              |
|         | ITEM      3. ITEM      4.ITEM      4T. | QUANTITATIVE      AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKCONTROLS      AND PROCEDURESCONTROLS      AND PROCEDURES | 17 1717    |
| PART      II | OTHER      INFORMATION                      | 17                                                                                                                     |
|         | ITEM      1.ITEM      1A.                   | LEGAL      PROCEEDINGSRISK      FACTORS                                                                                | 18              |
|         | ITEM      2.                                | UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                       | 18              |
|         | ITEM      3.                                | DEFAULTS      UPON SENIOR SECURITIES                                                                                   | 18              |
|         | ITEM      4.                                | SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                               | 18              |
|         | ITEM      5.                                | OTHER      INFORMATION                                                                                                 | 18              |
|         | ITEM      6.                                | EXHIBITS                                                                                                               | 18              |
|         |                                        | SIGNATURES                                                                                                             | 19              |

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| PRECISION      PETROLEUM CORPORATION                      |
|-----------------------------------------------------------|
| (A      Production Stage Company)                         |
| BALANCE      SHEETS                                       |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   |   | December      31, |   | September      30, |
|                                                      |   |   |   |   |   | 2009 |   | 2009 |
|                                                      |   |   |   |   |   | (Unaudited) |   | (Audited) |
|                                                      |   |   |   |   | ASSETS |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Current                                                   |   |   |   |   |   |   |   |   |
|                                                      | Cash      and cash equivalents |   |   |  $                            563 |   |  $                       12,944 |
|                                                      | Accounts      receivable, net |   |   |                           18,170 |   |                            14,600 |
|                                                      | Other      receivables |   |   |   |                           11,561 |   |                            10,028 |
|                                                      | Participation      deposits |   |   |                           57,500 |   |                           46,000 |
|                                                      |   |   | Total      current assets |                          87,794 |   |                           83,572 |
|                                                      |   |   |   |   |   |   |   |   |
| Oil      and gas properties, - using full cost accounting |   |                      1,022,614 |   |                         993,980 |
|                                                      | Less      accumulated depletion |   |   |                          (51,127) |   |                         (26,442) |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |    Oil      and gas properites-Net |   |   |                         971,487 |   |                         967,538 |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   | Total      assets |   |  $                 1,059,281 |   |  $                    1,051,110 |
|                                                      |   |   |   |   |   |   |   |   |
| LIABILITIES                                               |
|                                                      |   |   |   |   |   |   |   |   |
| Current      Liabilities                                  |   |   |   |   |   |   |   |
|                                                      | Accounts      payable and accrued liabilities |   |  $                      81,760 |   |  $                      48,342 |
|                                                      | Advances |   |   |   |                          77,500 |   |                           67,500 |
|                                                      | Short-term      notes payable |   |   |                        993,980 |   |                         993,980 |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      | Total      current liabilities |   |   |                      1,153,240 |   |                       1,109,822 |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   | Total      liabilities |   |                      1,153,240 |   |                       1,109,822 |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   | STOCKHOLDERS'      DEFICIT |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Capital      stock                                        |   |   |   |   |   |   |   |
|                                                      | Authorized: |   |   |   |   |   |   |
|                                                      |   | 200,000,000      common stock, $0.001 par value; |   |   |   |
|                                                      | Issued      and outstanding: |   |   |   |   |   |
|                                                      |   |   44,400,000      common shares (2008: 44,400,000) |                          44,400 |   |                           44,400 |
| Additional      paid-in capital                           |   |   |   |                           82,691 |   |                            82,691 |
| Accumulated      deficit during the exploration stage     |   |                       (153,653) |   |                        (153,653) |
| Accumulated      deficit                                  |   |   |   |                         (67,397) |   |                          (32,150) |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   | Total      stockholders' deficit |                        (93,959) |   |                          (58,712) |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   | Total      liabilities and stockholders' deficit |  $                 1,059,281 |   |  $                    1,051,110 |
|   F-1 PRECISION      PETROLEUM CORPORATION |   |   |
| (A      Production Stage Company)                         |   |   |
| STATEMENTS      OF OPERATIONS AND COMPREHENSIVE LOSS      |   |   |
| (Unaudited)                                               |   |   |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |  Three      Months Ended |   |   |
|                                                      |   |   |   | December 31, |   |   |
|                                                      |   |   |   | 2009 |   | 2008 |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Revenues                                                  |   |   |   |   |   |   |   |
|                                                      | Oil      and gas sales |   |  $                         63,011 |   |  $                               - |   |   |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   | Total      Revenues |   |                              63,011 |   |                                    - |   |   |
| Expenses                                                  |   |   |   |   |   |   |   |
|                                                      | Mineral      claims expense |   |                                      - |   |                             4,464 |   |   |
|                                                      | Lease      operating |   |   |                               5,474 |   |                                    - |   |   |
|                                                      | Production      taxes |   |                               4,536 |   |                                    - |   |   |
|                                                      | Depreciation,      depletion and amortization |   |                            24,685 |   |                                    - |   |   |
|                                                      | Interest      expense |   |   |                            24,850 |   |                                    - |   |   |
|                                                      | Legal      and accounting |   |                             12,695 |   |                             9,479 |   |   |
|                                                      | Management      fees |   |                               3,000 |   |                                    - |   |   |
|                                                      | Rent      expense |   |   |                                  875 |   |                                    - |   |   |
|                                                      | General      and administrative |   |                             22,143 |   |                                    - |   |   |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   | Total      Expenses |   |                            98,258 |   |                           13,943 |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Net      loss                                             |   |   |                          (35,247) |   |                         (13,943) |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Other      Comprehensive Income (loss)                    |   |   |   |   |   |   |
|                                                      | Foreign      currency translation adjustment |   |                                      - |   |                              1,787 |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Other      comprehensive loss                             |   |   |  $                     (35,247) |   |  $                     (12,156) |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Basic      and diluted loss per share                     |   |  $                          (0.00) |   |  $                        (0.00) |   |   |
|                                                      |   |   |   |   |   |   |   |   |
| Weighted      average number of shares                    |   |   |   |   |   |   |
|                                                      | outstanding-basic      and diluted |   |                    44,400,000 |   |                  44,400,000 |   |   |
|                                                      |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |

| PRECISION      PETROLEUM CORPORATION     |
|------------------------------------------|
| (A      Production Stage Company)        |
| STATEMENTS      OF STOCKHOLDERS' DEFICIT |
| (Unaudited)                              |
|                                     |   |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                     |   |   |   |   |   | Additional |   |   |   |   |   | Deficit |   | Other |   |   |
|                                     |   | Common      Shares |   | Paid-in |   | Stock |   | Accumulated |   | During      Exploration |   | Comprehensive |   |   |
|                                     |   | Number |   | Par Value |   | Capital |   | Payable |   | Deficit |   | Stage |   | Income |   | Total |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      as of September 30, 2008   |                        44,400,000 |   |                             44,400 |   |                                   67,635 |   |                                          - |   |                                                       - |   |                                      (122,290) |   |                                      297 |   |                                 (9,958) |
|                                     | Payable      paid by previous directors and |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |    officers |                                                       - |   |                                              - |   |                                    15,056 |   |                                          - |   |                                                       - |   |                                                               - |   |                                             - |   |                                   15,056 |
|                                     | Foreign      currency gain (loss) |                                                       - |   |                                              - |   |                                                    - |   |                                          - |   |                                                       - |   |                                                               - |   |                                 (297) |   |                                     (297) |
|                                     | Net      loss for the year |                                                       - |   |                                              - |   |                                                    - |   |                                          - |   |                                  (32,150) |   |                                          (31,363) |   |                                             - |   |                              (63,513) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance,      as of September 30, 2009   |                        44,400,000 |   |  $  44,400 |   |  $    82,691 |   |  $       - |   |  $        (32,150) |   |  $            (153,653) |   |  $                      - |   |  $      (58,712) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss for the three months       |   |   |   |   |   |   |   |   |                                 (35,247) |   |                                                               - |   |   |   |                             (35,247) |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      as of December 31, 2009     |                44,400,000 |   |  $                44,400 |   |  $        82,691 |   |  $                            - |   |  $        (67,397) |   |  $     (153,653) |   |  $                     - |   |  $          (93,959) |
|                                     |   |   |   |   |   |   |   |        F-3 |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| PRECISION      PETROLEUM CORPORATION(A      Production Stage Company) |
|-----------------------------------------------------------------------|
| STATEMENTS      OF CASH FLOWS                                         |
| (Unaudited)                                                           |
|                                                                  |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   | Three      months ended |
|                                                                  |   |   |   |   |   | December 31 |
|                                                                  |   |   |   |   |   |   |   |   |
|                                                                  |   |   |   |   |   | 2009 |   | 2008 |
| Operating      Activities                                             |   |   |   |   |   |   |
|                                                                  | Net      loss |   |   |   |  $                      (35,247) |   |  $                        (13,943) |
|                                                                  | Adjustments      for items not effecting cash: |   |   |   |   |
|                                                                  |   | Depletion,      depreciation and amortization |   |                             24,685 |   |                                        - |
|                                                                  |   | Mineral      claim fee |   |   |                                       - |   |                                 4,464 |
|                                                                  | Change      in non-cash working capital balances related to operations |   |   |   |
|                                                                  |   | Accounts      receivable |   |   |                             (3,570) |   |                                        - |
|                                                                  |   | Due      from others |   |   |                              (1,533) |   |                                        - |
|                                                                  |   | Accounts      payable and accrued liabilities |   |                              33,418 |   |                                 2,693 |
|                                                                  |   |   |   |   |   |   |   |   |
| Cash      used in operating activities                                |   |   |                              17,753 |   |                               (6,786) |
|                                                                  |   |   |   |   |   |   |   |   |
| Investing      Activities                                             |   |   |   |   |   |   |
|                                                                  | Acquisition      of oil and gas properties |   |   |                           (28,634) |   |                                        - |
|                                                                  | Participation      deposits |   |   |   |                             (11,500) |   |                                        - |
|                                                                  |   |   |   |   |   |   |   |   |
| Cash      used in investing activities                                |   |   |                            (40,134) |   |                                        - |
|                                                                  |   |   |   |   |   |   |   |   |
| Financing      Activities                                             |   |   |   |   |   |   |
|                                                                  | Advances |   |   |   |                              10,000 |   |                                 5,276 |
|                                                                  |   |   |   |   |   |   |   |   |
| Cash      provided by financing activities                            |   |   |                              10,000 |   |                                 5,276 |
|                                                                  |   |   |   |   |   |   |   |   |
| Effect      of foreign currency translation                           |   |   |                                       - |   |                                  1,784 |
|                                                                  |   |   |   |   |   |   |   |   |
| Increase      (decrease) in cash during the year                      |   |   |                             (12,381) |   |                                    274 |
|                                                                  |   |   |   |   |   |   |   |   |
| Cash,      beginning of the year                                      |   |   |   |                              12,944 |   |                                  (274) |
|                                                                  |   |   |   |   |   |   |   |   |
| Cash,      end of the year                                            |   |   |   |  $                              563 |   |  $                                   - |
|                                                                  |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information:                |   |   |   |   |
|   Cash      paid during the year for income taxes           |   |   |  $                                  - |   |  $                                   - |
|   Cash      paid during the year for interest               |   |   |  $                                  - |   |  $                                   - |
|                                                                  |   |   |   |   |   |   |   |   |

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| Note      1 | Interim      Reporting |
|-------------|------------------------|

|   | The      accompanying financial statements of Precision Petroleum Corporation have      not been audited by independent public accountants.  In the      opinion of management, the accompanying financial statements reflect all      adjustments necessary to present fairly our financial position at December      31, 2009 and our income, stockholder’s deficit and cash flows for the      three months ended December 31, 2009 and 2008. All such adjustments are of      a normal recurring nature.  In preparing the accompanying      financial statements, management has made certain estimates and      assumptions that affect reported amounts in the financial statements and      disclosures of contingencies.  Actual results may differ from      those estimates.  The results for interim periods are not      necessarily indicative of annualresults. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Certain      disclosures have been condensed or omitted from these financial      statements.  Accordingly, these financial statements should be      read with the financial statements included in our 2009 Annual Report on      Form 10-K. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Note      2 | Nature and Continuance      of Operations |
|-------------|-------------------------------------------|

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| Note      3 | Summary of Significant      Accounting Policies |
|-------------|-------------------------------------------------|

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| Note      4 | Oil and Gas      Properties |
|-------------|-----------------------------|

| a)   | Effective      July 1, 2009, the Company purchased various producing properties located      in Garvin County, Pottawatomie County, Nowata County and Seminole County,      Oklahoma.  The Company utilized short-term financing to acquire      these properties. The various net revenue acquired range from .2808% to a      67.97% net revenue interest.  In October of 2009, the Company      acquired additional working interest in two of the leases.  In      November of 2009, the Company acquired a 70.10153% working interest in the      Thompson #2 well, located in Garvin County, Oklahoma.  The      Company paid $10,000 down on this well and signed an agreement to pay the      balance within 30 days of the agreement. An additional $18,634 of      liabilites were assumed by the Company as part of the total $28,634      purchase price. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b)   | On      January 27, 2009, the Company entered into a Participation Agreement with      Nitro Petroleum Incorporated (“Nitro”), pursuant to which the Company      obtained from Nitro the right to participate in Phase One of Nitro’s      Powder river Basin Project in Montana.  Nitro acquired certain      oil and gas leases in the Powder River Basin in Montana pursuant to a      Memorandum of Understanding dated January 26, 2009 with REDS,      LLC. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | The      company has also obtained financing from a consultant with a balance of      $27,147 (2008, $5,276) and also has received advances of $77,500 (2008,      $0) from unrelated third parties.  The balances are due on      demand and are not interestbearing. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | 32.1 | Certification      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 – Chief Executive  Officer. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification      Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 – Chief Financial  Officer. |
|--------|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|